Company may face bankruptcy.
It grew fast, hefted onto the shoulders of ultimate fighters. But the energy drink company Xyience might be crumbling faster than some of the opponents of Chuck Liddell.
Xyience, the Las Vegas-based maker of Xenergy, had seen fast expansion as a result of a sponsorship deal with the mixed martial arts league UFC and its popular television show “The Ultimate Fighter.” But this week the company notified much of its approximately 70-member sales force that it would be firing them due to financial setbacks, and this has led to speculation it would soon file for bankruptcy.
The firings come after Xyience had experienced a remarkable run of success, drawing another $12 million in investment as recently as one month ago. The brand is viable, sources say, as it has high name recognition in the crowd of young men who support the fast-growing UFC.
“It’s a great brand, and the folks out at retail really identify with it,” said Earl Kight, head of sales at San Diego-based Mesa Distributing. “We were very careful and patient with it and we’ll continue to be patient with it now.”
That support may not carry over to investors, who earlier this year ousted the company’s founder, Russell Pike. Pike, facing rumors of lawsuits and bad publicity reported on largely by the sport’s rabid Internet following, was forced out in January. After installing a temporary CEO and president, one of the company’s primary investors, Adam Frank, recently became CEO.
Meanwhile, the company’s sales kept rising – although those sales may not have kept up with a marketing outlay that involved television commercials, models, and the ongoing sponsorship of a sporting confederation whose surging popularity must be making it increasingly more expensive.
“They were spending so much on marketing that we didn’t even have Point-of-Sale” materials, said one laid-off salesman. “The tie in with UFC is incredible, but there are a lot of issues.”
That tie-in may be in jeopardy itself, however, as several of the UFC’s top fighters have begun to distance themselves from Xyience products. Despite the lack of individual sponsorship, however, it remains, with Toyo Tires and Mickey’s Malt Liquor, one of the league’s three main sponsors.
Source: BevNET.com Staff